[18-96] Tennessee Wine and Spirits Retailers Association v. Thomas

Tennessee Wine and Spirits Retailers Association v. Thomas

Justia (with opinion) · Docket · oyez.org

Argued on Jan 16, 2019.
Decided on Jun 26, 2019.

Petitioner: Tennessee Wine and Spirits Retailers Association.
Respondent: Russell F. Thomas, Executive Director of the Tennessee Alcoholic Beverage Commission, et al..

Advocates:

• Shay Dvoretzky (for the petitioner)
• David L. Franklin (for Illinois, et al. as amici curiae, in support of the petitioner)
• Carter G. Phillips (for the respondents)

Facts of the case (from oyez.org)

To sell liquor in the state of Tennessee, one must have a license from the Tennessee Alcoholic Beverage Commission (TABC). Under Tennessee Code Annotated § 57-3-204(b)(2)(A), an individual must have “been a bona fide resident of [Tennessee] during the two-year period immediately preceding the date upon which application is made to the commission,” and there is a ten-year residency requirement to renew a liquor license. The state imposes similar requirements on entities seeking a license.

Two entities did not satisfy the residency requirement when they applied for a license with the TABC, so TABC deferred voting on their applications. The Tennessee Wine and Spirits Retailers Association, which represents Tennessee business owners and represented the two entities here, informed TABC that litigation was likely. In response, the state attorney general filed an action in state court seeking declaratory judgment as to the constitutionality of the durational-residency requirements. The Association removed the action to federal district court.

The district court determined that the durational-residency requirements are facially discriminatory, in violation of the dormant Commerce Clause of the US Constitution. The Sixth Circuit affirmed.

Question

Does the dormant Commerce Clause permit a state to regulate liquor sales by granting licenses only to individuals or entities that have met state residency requirements?

Conclusion

The dormant Commerce Clause forbids, notwithstanding the Twenty-First Amendment, a state from regulating liquor sales by granting licenses only to individuals or entities that have met state residency requirements. Justice Samuel Alito delivered the 7-2 opinion of the Court.

The Court’s Commerce Clause jurisprudence holds that “a state law that discriminates against out-of-state goods or nonresident economic actors can be sustained only on a showing that it is narrowly tailored to ‘advance a legitimate local purpose.’” Tennessee’s residency requirement favors residents over nonresidents. The Association does not defend the law under this standard, however, instead pointing to the state’s authority to regulate the “transportation or importation” of alcohol under the Twenty-First Amendment.

Section 2 of the Twenty-First Amendment states: “The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.” Viewing this provision “as one part of a unified constitutional scheme,” the Court examined the “basic structure of federal-state alcohol regulatory authority.” The Court noted that at the time the Eighteenth Amendment (nationwide prohibition) was ratified, it had already been established that the Commerce Clause prevented states from discriminating against the citizens and products of other states. Against this backdrop, when the Twenty-First Amendment was ratified, “the Commerce Clause did not permit the States to impose protectionist measures clothed as police-power regulations.” Thus, while § 2 of the Amendment gives states latitude with respect to the regulation of alcohol, it does not allow them to violate the nondiscrimination principle.

In light of this analysis, the Court concluded that protectionism is not a legitimate local purpose and that the residency requirement “has at best a highly attenuated relationship to public health or safety.”

Justice Neil Gorsuch filed a dissenting opinion in which Justice Clarence Thomas joined. Justice Gorsuch argued that the original meaning of the Twenty-First Amendment was to allow states broad authority to regulate alcohol within their borders, which encompassed the authority to impose residency requirements on those seeking to sell alcohol.